Former R. Allen Stanford director describes reassurance efforts

By Terri Langford |
January 26, 2012

HOUSTON — As the worldwide financial crisis took hold in 2008, investors in certificates of deposit issued by R. Allen Stanford's bank began cashing out, and fearing a run on the bank, Stanford amped up efforts to reassure them, a former executive testified Thursday.

“We got to hold our clients' hands ... we have to stay calm,” Stanford told members of his sales staff in October 2008.

Jurors saw a video of that Miami gathering during the testimony of Jason Green, a former director of Stanford Group Co.'s office in Baton Rouge, La., and the most senior executive to testify so far in Stanford's fraud trial.

In the video, Stanford railed against Wall Street, blaming companies there for the downturn that was spooking Stanford clients.

The government alleges Stanford and others told clients that funds raised through CDs issued by the bank were put in conservative, liquid investments when in fact they went into risky business ventures by Stanford and personal loans to him.

Prosecution exhibits Thursday included a December 2008 newsletter to clients with a message from Stanford. “Although our earnings will not meet expectations in 2008,” he wrote, “Stanford International Bank Ltd. is strong, safe and fiscally sound.”

Around the same time, however, Stanford told Green the bank had lost $600 million in a single day, Green testified.

Green worked for Stanford from 1996 until 2009, when the U.S. Securities and Exchange Commission forced Stanford's companies into receivership.

The government's third witness against Stanford, Green is himself a defendant in civil suits by Stanford investors.

He described a pressure-cooker culture in which teams competed to meet sales goals. U.S. teams had names including Superstars and Money Machine, and a team selling in Mexico was the Aztec Eagles.

Top sellers received bonuses presented during annual retreats at luxury locations. Green testified he gave his $3 million in bonuses to his church.

By early 2009, however, managers were faced with far more customers cashing out than new customers coming in.

On Feb. 11, 2009, Green said, he sent a note to Stanford urging him to do more to reassure depositors but got no reply.

Compounding his worries, he learned soon after that Stanford's chief investment officer, Laura Holt, managed only a portion of the Stanford portfolio.

Although Green had understood she oversaw all of the firm's investments, she told him she had no knowledge of where some investor funds went.

In mid-February 2009, a judge ordered Stanford's companies into receivership and froze their assets.

Stanford was later indicted on fraud and conspiracy charges. Holt is one of four other defendants — three company executives and an Antiguan regulator — named in a separate indictment and slated for trial later.

Stanford's former chief financial officer, James Davis, was charged separately, pleaded guilty to three felony counts, and is expected to testify for the prosecution next week.

On Thursday morning, a lawyer for Stanford challenged a graphic designer's claims that he saw Stanford and Davis changing numbers in an annual report before sending it to a printer.

Under cross-examination by defense lawyer Ali Fazel, Lionel Leo Mejia said he helped prepare reports, promotional material and advertising but did not have detailed knowledge of Stanford's business operations.

When a prosecutor questioned him further, however, he stuck by his contention regarding the changed numbers.

“Were you just guessing that you saw Stanford in the office changing numbers on the annual report?” asked Assistant U.S. Attorney Gregg Costa.

“No,” Mejia replied.

Stanford is a native of Mexia who spent much of his early career in Houston.

By the time his business collapsed, however, he held dual citizenship in the United States and Antigua, a Caribbean island nation where he had become so prominent that he was knighted and called Sir Allen.